How Inflation Protection Works in a Disability Insurance Policy

The best long term disability insurance plans may offer inflation protection provisions. The disability insurance companies that offer this feature realize that, depending on the state of the economy, some inflation factor is computed at every year’s end by a number of government and private sources.

Normally, an inflation protection provision will calculate the generally accepted rate of inflation for last year and invoke a cost of living adjustment (COLA) similar to those in many compensation plans and union contracts. For example, if the inflation percentage for the prior year was 4% and your current disability income benefit (should you need it) is at $3,500 per month, this provision would increase your monthly benefit to $3,640 (a 4% increase) for the coming year.

Many of the best disability insurance companies offer this provision as another service to keep you as a satisfied policyholder. Learn about these and other renewable provisions from excellent websites like ProtectYourIncome.com.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.